Chapter 3
The need for reform of the aged care sector
We do not want a response that bandaids the system
financially and ignores the need for reform to deliver better services.
Mr Harold Milham, Carer.[1]
3.1
From the inquiry's inception, it became overwhelmingly evident that aged
care providers and involved stakeholders across the country recognised a need
to reform the aged care sector in Australia. Witnesses commented on the
'bandaid' approach that has been taken to problems within the aged care sector
and of the fact that they have been calling for reform for many years. It was
argued that the significant problems currently facing the sector and the need
to meet future demand must be addressed immediately and in a comprehensive and
coherent manner. The Aged Care Association Australia highlighted the need for
policy to meet expectations in the area of aged care services:
If Australia is to develop policy solutions that will address
these significant demographic, care cost and service volumes, it is fundamental
that the current aged care system including the financial basis underpinning
the current system is placed on a strong sustainable basis with the real cost
of care and capital being realized by Government and community. Further, if
Government and community are not prepared to appropriately fund their care and
infrastructure expectations then both must be prepared to adjust their
expectations accordingly.[2]
3.2
Anglicare Australia argued that a 'systemic shake-up of the way in which
aged care services are funded, planned, allocated and provided' is required.[3]
Similarly, the Aged Care Association highlighted the need for reform of the
sector and dialogue:
...we strongly believe that there is a real need for long-term
structural reform and that that dialogue needs to commence very, very shortly
between the Australian community, the Australian aged care industry and the
Australian government.[4]
3.3
It is clear that growing demand for aged care services and changing
expectations of the sector and indeed changing community engagement with the
sector pose key challenges to the provision of quality aged care. As one case
in point, growing community demand for single bedroom with ensuite residential
care accommodation has serious implications for the financial viability of
residential aged care providers. According to Grant Thornton Australia, this
expectation is 'the major influence on the design of modern residential
facilities in Australia' and yet, the returns for operators of such facilities
were 'approximately half of those that were achieved by those with older
institutional facilities with shared rooms'.[5]
However, current Commonwealth Government certification guidelines require an
average across facilities of 1.5 residents per room for new buildings
permitting two-thirds of residents to be in double rooms and one-third in
single rooms.[6]
3.4
Professor Warren Hogan termed the baby boomer generation the 'most
diverse demographic grouping to access residential care services in Australia's
history'.[7]
The committee considers that there is a need for immediate action supported by
ongoing sectoral wide dialogue to identify the needs of this generation and their
short- and long-term impact on the aged care sector.
3.5
The committee considers therefore, that all stakeholders including all
levels of government, residential and community aged care providers,
professional bodies, lobby groups, involved individuals, and clients of aged
care services and their families need to be engaged in ongoing dialogue. The committee
believes that this is best achieved through the establishment of a national
aged care forum. Such a forum would be required to meet on a regular basis to
discuss key current and future challenges affecting the sector. It should be
supported and coordinated, at least in the first instance, by the Department of
Health and Ageing (the department). The committee also recommends that such a
forum establish a taskforce (or an equivalent body) representing all such
stakeholders to action critical issues identified by the national forum.
Recommendation 1
3.6
The committee recommends the establishment of a national aged care forum,
reporting directly to the Minister for Health and Ageing and coordinated by the
Department of Health and Ageing, to consider, on an on-going basis, current and
future challenges to the aged care sector.
Recommendation 2
3.7
The committee recommends that the national aged care forum establish a
taskforce (or equivalent body) representative of all involved aged care
stakeholders including clients to action and where possible implement determinations
of the national forum.
3.8
There are widely held concerns regarding what has been seen as a largely
piecemeal approach to aged care funding which has not permitted adequate
consideration of the sector as a whole, its future challenges and the changing
expectations upon it. Witnesses commented that a systematic review of
operations under the Aged Care Act 1997 is required. Baptistcare, as one
case in point, argued:
The Aged Care Act 1997 is now entering its twelfth
year of operation and with the exception of the Hogan review...in 2004, there
has been no systematic review into its operations, nor has there been any
evidence based data to suggest that the quality of care has improved since its
inception...while this inquiry is welcomed, if for no other reason than the
lack of any substantial review of the operation of the Act, it does not address
some of the features of the Act's operations that need to be addressed if
Australia is to meet its aged care challenges over the next 15 to 25 years.[8]
3.9
The Aged Care Alliance (ACA) highlighted that while the 'interdependence
of investment, financing decisions, construction, costs and demand with the
subsidy regime is directly relevant to the sector's capacity to continue to
meet expected quality standards', policy such as the Aged Care Funding
Instrument (ACFI) had been implemented without consideration of the effect on
the entire system.[9]
The ACA continued:
The policy weakness remains the separate policy decisions
made without consideration of the total capacity and mix of service delivery in
the medium term where identifiable demographic trends are identified.[10]
3.10
The committee appreciates such concerns and considers that an
all-encompassing review of aged care services in Australia needs to be undertaken.
The committee also considers that it is timely, after 12 years of
operation and in light of emerging challenges for the sector, that a survey of sectoral
operations under the Aged Care Act 1997 be conducted as a major part of the
review.
3.11
Moreover, the committee is acutely aware of the need for future planning
in light of growing demand on aged care services, It recommends that such a
sectoral review consider future projections to enable planning to address
challenges that the industry is expected to face in the future.
Recommendation 3
3.12
The committee recommends that the Department of Health and Ageing, in
cooperation with the suggested taskforce and in partnership with all involved
stakeholders including clients, undertake an all-encompassing review of the Aged
Care Act 1997 and related regulations. The review should:
-
equally examine the provision of residential and community
aged care services in Australia with consideration of both current and future
challenges in the provision of aged care services;
-
provide future projections to enable both short and
longer-term sectoral planning.
Benchmark of care costs for the provision of quality aged care services
3.13
A recurring theme throughout this inquiry was the need to establish
benchmark of care costs in order to understand the relationship between subsidy
allocation and indexation.[11]
Of this, the Australian Nursing Federation stated:
The recently released Grant Thornton Report argues that
margins in high care are as low as 1.1% and up to 40% of providers are unviable
and the recent collective decision by some providers to not tender for beds has
brought the viability of the sector into the spotlight. The government contends
that the sector is viable. It is difficult to ascertain the truth without a
true benchmark of care costs, which is analysed against income.[12]
3.14
Catholic Health Australia held that there is no real relationship
between the care subsidies and the cost of care and quality outcomes required.[13]
It also maintained that a defined and costed benchmark of care is required:
This benchmark of care must reflect the real costs of
providing a quality aged care service in different regions around Australia, and allow for the flexible delivery of aged care services responsive to the
needs of the individual.[14]
3.15
However, concerns were raised that, in addition to the need to
reconsider current funding levels, future funding levels required to meet
expected demand is also critical. Aged and Community Care Victoria (ACCV)
stated for example, that in the area of residential aged care, additional
income and funding sources were required in order that the sector can 'provide
suitable residential facilities that meet the demands which result from our
ageing population'.[15]
Mt St Vincent Nursing Home and Therapy Centre expressed the view that aged care
has never been funded to enable forward planning to implement improved systems
that would otherwise alleviate pressures.[16]
This view was supported by ACCV which called on the Federal Government to:
...undertake, in collaboration with the industry, a review to
set in place a defined and properly costed funding benchmark for residential
and community care which reflects the real costs of providing quality services.
This benchmark should exhibit the real costs of staffing and operating quality
care for our elderly, including those who are frail and have complex care
needs.[17]
3.16
According to Mr Cam Ansell of Grant Thornton Australia, there is a
'mismatch' between recognition of the need for care and the subsidy levels
resulting from the fact that:
...we have never actually done the amount of research to work
out what it does cost to look after a resident, not just in terms of their care
and their clinical cost but what does it cost to accommodate them? What are
their costs in terms of their support with their personal needs? If we are able
to do that, we would be able to build a subsidy system that better reflects
actual need...
So if you understand what it costs to deliver the care and
the accommodation, you can come up with suitable strategies for your subsidies,
you can work out what is appropriate in terms of what the user should pay for
and what the taxpayer should pay for, and it also gives you the opportunity to
consider how those things change over time so we can then apply an indication
that meets that cost.[18]
3.17
The Aged Care Association Australia (ACAA) held that a study of the
benchmark costs of care should take place as part of a 'longer review of
industry structure and quality deliverables'. Mr Rod Young of the ACAA noted
that:
Until this exercise is undertaken, it will be difficult to
know what providers are expected to provide, what the community expects us to
provide and what government expects us to deliver. In considering what the
index for the industry should be, ACAA is persuaded that it should be done
using the index that applies to age pensions, which is made up of either 25 per
cent of average male weekly earnings or the CPI, whichever is the greater.[19]
3.18
Mr Young continued:
What is it actually costing? If we expect the industry to provide
this level of service at this level of quality, what should we be paying for
that to be achieved? All we have ever done in any of our reviews is look at
what the current subsidy is and accept that. When you look at what Hogan did,
there were over 700 providers participating in a financial survey. Then what
was accepted was: These are our average costs across the various parts of the
accounts of those providers and we accept that as being a reasonable
assessment. This is the subsidy being paid by government and the income being
paid by residents, and we accept that as being a reasonable payment for those
care services. We never really analysed it.[20]
3.19
Care Connect suggested that establishing benchmark of care costs for
CACP, Extended Care at Home (EACH) and Extended Care at Home Dementia (EACH-D)
should consider non-direct care costs such as the initial time spent assessing
clients before they are 'activated' on a package of care and case management
time.[21]
3.20
Mr Greg Mundy of Aged and Community Services Australia stated that
establishing benchmark of care costs is long overdue in Australia:
The Productivity Commission recommended that in their 1999
report on residential aged groups 10 years ago...I think coming up with a firmer
definition of what we expect to be done, what that is likely to cost and
relating our subsidies to that would be well supported by many of the
stakeholders rather than, as we have been doing, just simply doing what we can
get away with in terms of market forces. It would put an end to lots of
arguments. It might cause a headache principally for the funders, but I think
the other stakeholders would all support getting some data on the table,
saying: 'This is what we should be doing. This is a reasonable cost for it.
That is where we should start from.'[22]
3.21
The committee acknowledges the need for benchmark of care costs with a
view to establishment of an aged care index. In this regard, the committee
recalls recommendations of the Productivity Commission and Senate Community
Affairs Committee respectively. Recommendation 2 of the Productivity
Commission's 1999 inquiry report on Nursing Home Subsidies stated:
The Government should specify its intended outcomes in terms
of a standard of care benchmark. The purchase price of care outputs from providers
by way of subsidy funding, in combination with funding from residents, should
be adequate to meet the cost of providing that benchmark standard of care.[23]
3.22
Recommendation 13 of the Senate Community Affairs Committee's 2005 Quality
and equity in aged care inquiry report in relation to the Aged Care
Standards and Accreditation Agency noted:
That the Agency, in consultation with the aged care sector
and consumers, develop a benchmark of care which ensures that the level and
skills mix of staffing at each residential aged care facility is sufficient to
deliver the care required considering the needs of residents. The benchmark of
care that is developed needs to be flexible so as to accommodate the changing
needs of residents.[24]
3.23
The committee reaffirms the work of the Productivity Commission and
Senate Community Affairs Committee in this regard and recommends a national
survey of benchmark costs of residential and community aged care. Such a survey
will establish benchmark of care costs which can then be applied to funding and
operational issues.
Recommendation 4
3.24
The committee recommends that the Department of Health and Ageing in
association with the suggested taskforce and in consultation with all aged care
stakeholders including clients undertake analysis to establish benchmark of
care costs.
Audited General Purpose Financial Reports
3.25
Aged care providers are required to submit Audited General Purpose
Financial Reports to maintain the Conditional Adjustment Payment (CAP) funding. Concerns were raised in relation to the relevance of information required in the
reports and that the Department of Health and Ageing no longer releases the
data contained in the reports. Of the first concern, Mr Cam Ansell of Grant
Thornton Australia stated:
General purpose financial reports... are highly summarised
information that apply all Australian accounting standards. Unfortunately, in
terms of giving an indication of performance, it is very limited. It only
provides a very small assessment of what performance is in residential aged
care.[25]
3.26
According to Mr Ansell, initial recommendations that general purpose
financial reports 'allow providers to understand how they are performing and
for decision makers to be able to understand what aspects of their business
were causing them to perform the way they were performing' were not taken up.[26]
3.27
ACAA also noted that the department has not released the data from
2005–06 onwards which makes:
...this important piece of industry financial benchmarking data
unavailable to aged care providers for site specific benchmarking and to the
industry more broadly.[27]
3.28
The department responded that the data had not been made available in
the last few years 'because we had some concerns about the methodological
soundness of it'.[28]
Dr David Cullen, Department of Health and Ageing, commented further:
The CAP reporting requirements developed over time. In the
first few years providers were permitted to opt out of certain accounting
standards and also not to report at the residential care segment. They reported
at the whole entity level rather than at their residential care operations
level. We provided that data for the first two years because we had agreed to
do so, but we were very unhappy with the accuracy or the ability to draw
conclusions from that data because there was noncompliance with accounting
standards. We then went through a process of tightening those...
Providers were transitioning towards compliance with the
accounting standards. We chose to pause for a few years with releasing the data
because we had concerns about whether adequate conclusions could be drawn from
it. We are now satisfied that we have all providers reporting according to the
accounting standards and reporting on their residential care segment. So this
data set is one that we are confident about and on which some analysis has been
done.[29]
3.29
The committee acknowledges the concerns expressed by the department in
relation to the soundness of the data. In the circumstances of the current
claim and counter claim about viability, the committee finds it very difficult
to understand the delay in fixing such a vital tool. However, if the department
is satisfied that the reports are now in accordance with accounting standards,
publication of the data should recommence as soon as practicable.
Recommendation 5
3.30
The committee recommends that the Department of Health and Ageing recommence
publication of Audited General Purpose Financial Reports as soon practicable and
continue to publish such reports annually as a matter of course.
Recommendation 6
3.31
The committee recommends that the Department of Health and Ageing review
the Audited General Purpose Financial Reports with an aim to identifying any
necessary reporting changes to ensure that the information available provides a
clear and comparative understanding of provider performance.
Nationally consistent aged care data
3.32
During the inquiry, concerns were also raised about the lack of
nationally consistent aged care data. Ms Derryn Wilson of the Municipal
Association of Victoria stressed the importance of addressing the issue from
the perspective of local councils:
In terms of a national aged-care planning framework, there
needs to be a coordinated development and use of supply, demand and utilisation
datasets. That fundamental need for data has been there for quite some time,
and it is an absolute necessity. There is opportunity to build on the local
area data and to incorporate a range of related program areas with agreed
processes with the three tiers of government and the involvement of providers
and consumers.
The lack of publicly available supply and utilisation data to
the local area level from the Commonwealth aged-care programs has long been a
source of irritation for councils. That need for data has been around. It
really needs to be addressed. We also believe that it is fundamental to good
service system planning, and it requires that opportunity to be able to
evaluate and consider what is really a quality product.[30]
3.33
Whilst there are a number of bodies who conduct surveys on performance
in the aged care sector, much of the research is conducted by private companies
which offer their analysis for a fee. Therefore, their data may not be publicly
available, and rather, has to be purchased as part of a
commercial-in-confidence arrangement between the body in question and the
purchaser. The committee is also concerned that different methodological
approaches which utilise different indicators and employ different definitions
do not lend themselves easily to comparative analysis. Moreover, where such
data is not publicly available, public scrutiny and discussion across the sector
is all but impossible.
3.34
The committee recommends that a common assessment approach be considered
by the sector in cooperation with all levels of government in order that a
nationally accepted standard be instituted and published with a view to
establishing the financial status of aged care in Australia. Such an approach
should be transparent and enable disaggregation of information.
3.35
The committee appreciates that a number of bodies, including the
Australian Institute of Health and Welfare, produce important information on
the aged care sector and that in many instances, what is required is greater
coordination to enable data sharing rather than simply the creation of new data
sets. In this regard, Ms Derryn Wilson of the Municipal Association of Victoria
noted:
I think there is certainly existing data that could and
should be shared, but I think...that, as we move forward, with an older Australia, there are lots of issues that do need to be built into the data collection, and
that includes relationships with other programs. For instance, there is quite a
lot of data on HACC utilisation that is shared between the state and LGAs. And
you cannot really look at CACPs without looking at who and how many are using
the HACC services.[31]
3.36
Similarly, Ms Janet Carty of the Tasmanian Department of Health and
Human Services emphasised the need for streamlining reporting across the
sector:
What we are talking about here is – and I think it was what
the providers were talking about in the previous section – that there is a huge
reporting burden. That is a major amount of work, and we would like to see some
of that streamlined. We have done a lot of that work through the community care
reform initiatives. We are aware that you can get synergies across the system
in planning and in quality reporting. It is of concern that there are major
disparities across each different program type, and different requirements
under each program type. We would suggest that you could possibly develop a
system—or even that a system may have been developed, through submissions—that
might be less onerous for providers to report on.[32]
3.37
In light of the evidence before it, the committee recommends the
establishment of a national roundtable of key bodies engaged in research, aged
care surveys and data gathering which is representative of stakeholders across
the sector including all levels of government. The objective of the roundtable
would be to discuss and publicise methodology, approach and findings to enable
streamlining of data and provide for comparative analysis and ongoing
information sharing.
3.38
Comprehensive nationally agreed data sets and application across the
sector have the potential to provide a clear picture of the financial health of
aged care providers, their efficiency in meeting client needs, to inform
ongoing debates in the sector, and the policy decisions emanating from them.
Recommendation 7
3.39
The committee recommends the establishment of a nationally consistent
methodological approach to data gathering and research on the financial status
of the residential and community aged care sector. Towards this goal, the
committee recommends the establishment of a roundtable of key stakeholders
engaged in such research and facilitated by the Department of Health and Ageing
to discuss and agree upon common indicators and definitions to enable
comparative analysis.
Deficiencies in information on aged
care needs and services
3.40
The Australian Institute of Health and Welfare noted a number of
information gaps which limit service planning including:
-
the absence of a currently accepted approach to measurement of
potential or action demand for formal aged care services;
-
the lack of national level information about the care preferences
of potential and current aged care program consumers and their carers and
families;
-
the lack of on-going information about the care needs of people
who receive CACPs, EACH or EACH-D packages and the amount and type of
assistance provided through these programs; and
-
the absence of cross-program information which could be used,
among other things, to develop more robust estimates about the numbers of
people using all aged care services and to build better evidence about
utilisation patterns and pathways through the system of aged care services as a
whole.[33]
3.41
Witnesses before the committee including Mr Greg Mundy of ACAA
emphasised that such information is vital for planning and to establish greater
accuracy in regard to the current ratio of high and low care:
The current ratio does not recognise the actual demand that
presents at the door, which is more like 60 per cent high care rather than 50
per cent, so we ought to take account of that. But rather, than just come up
with a number, I think it would repay a quick three-month study of more
detailed characteristics of older people and their needs so that we have got
just a little bit more science behind those numbers.[34]
3.42
Concerns were also raised about the lack of information provided on the
Commonwealth planning process. Ms Derryn Wilson from the Municipal Association
of Victoria elaborated:
The Australian Institute of Health and Welfare reports have
the data at the state and national level, but data on either the Commonwealth
planning process or for utilisation in parts of the other planning processes
for community care is not made available at the state level. So there is a big
gap there in everybody being on the same page with the same knowledge that
helps, then, look at the quantitative situation and allows that qualitative
discussion about why are we different from this place. What is different about
our community that we are not using as many of this sort of thing? It does make
the process much less rich and informed.[35]
3.43
The committee acknowledges such deficiencies in information and the need
to address them and suggests that the recommended taskforce (or equivalent
body) under the auspices of the national aged care forum consider means of
address.
Recommendation 8
3.44
The committee recommends that the Department of Health and Ageing in
association with the suggested taskforce (or equivalent body) and in collaboration
with the Australian Institute of Health and Welfare review and address
deficiencies in information in the aged care sector.
Navigation: Previous Page | Contents | Next Page